Invest in these Cybersecurity Shares for Long-Term Growth over the Coming Decade:
Cybersecurity Stalwarts: Riding the Wave of Tech Threats
The technology sector has been rocked by recent turmoil due to fears over escalating tariffs, persistent inflation, and rising interest rates. However, the cybersecurity sector often weathers these macroeconomic storms well. After all, digital safeguards are a necessity, not a luxury, and businesses aren't likely to skimp on their cybersecurity measures to save a few bucks.
In these challenging times, it's the established players—those with "sticky" business models and wide protective moats—that tend to weather the storm and continue to grow. Let's delve into three such resilient companies—CrowdStrike (CRWD -1.24%), CyberArk (CYBR -0.43%), and Tenable (TENB -1.12%)—that are well-positioned to thrive amid the expanding cybersecurity market over the next decade.
1. CrowdStrike
Many cybersecurity companies rely on on-site appliances to run their services, but CrowdStrike is blowing up that antiquated model with its cloud-native platform, Falcon. Falcon requires no on-site appliances and instead encourages customers to sign up for its subscription-based platform, adding more security modules as necessary.
By the end of fiscal 2025, 67% of CrowdStrike's customers had adopted at least five of its security modules, making a big leap from the 33% ratio at the end of fiscal 2020. From fiscal 2020 to fiscal 2025, its revenue grew at a staggering compound annual growth rate (CAGR) of 52%, making it one of the sector's fastest-growing companies. From fiscal 2025 to fiscal 2027, analysts expect its revenue to rise at a CAGR of 21%.
While CrowdStrike might seem a bit pricy, trading at 13 times next year's sales, it could remain one of the best growth stocks in the sector over the next decade, even though it isn't profitable yet on a generally accepted accounting principles (GAAP) basis.
2. CyberArk
It's not just external threats hackers pose; insider threats, such as disgruntled employees and corporate spies, can also wreak havoc. CyberArk steps up with its privileged access management (PAM) platform, which fortifies internal security, identifies threats, and seals off compromised systems.
CyberArk controls around 38% of the PAM market, according to Morgan Stanley. Persistence Market Research predicts that market will expand at a CAGR of 21.4% from 2024 to 2033, so CyberArk could still have room to grow.
From 2014 to 2024, CyberArk's revenue grew at a CAGR of 26%. Analysts anticipate its revenue to continue rising at a CAGR of 26% from 2024 to 2026. Despite a not-so-profitable GAAP status, CyberArk could still balloon over the next decade as more companies prioritize those pesky internal threats.
3. Tenable
While CyberArk focuses on securing against internal threats, Tenable takes a proactive approach by scanning organizations' infrastructure for misconfigured software, weak passwords, and other security vulnerabilities through its flagship platform, Nessus.
Tenable wraps many of its services together in its all-in-one Tenable One platform, giving companies a clearer view of their "modern attack surface" across multiple computing platforms and applications.
From 2019 to 2024, Tenable's revenue grew at a CAGR of 20%. From 2024 to 2027, analysts forecast its revenue to increase at a more modest CAGR of 9%. While its growth might slow, Tenable is finally delivering profits, turning GAAP-profitable in the fourth quarter of 2024 and anticipating continued profitability in 2025, with EPS set to surge roughly 29 times by 2027.
Tenable isn't growing as swiftly as CrowdStrike or CyberArk, but it's priced much more attractively at four times next year's sales. Over the next few years, it could inexorably climb higher as more companies focus on upgrading their cybersecurity defenses.
Disclaimer: The cybersecurity market is expected to see significant expansion over the next decade due to surging cyber threats, digital transformation, and the widespread adoption of AI and cloud computing. As a result, companies like CrowdStrike, CyberArk, and Tenable could continue to thrive. However, always conduct thorough research and consult with a financial advisor before making investment decisions.
- When considering future investments, CrowdStrike's cloud-native Falcon platform could be a promising choice, as it has experienced impressive growth, with a revenue CAGR of 52% from 2020 to 2025, and is expected to grow at a CAGR of 21% from 2025 to 2027, despite its high valuation of 13 times next year's sales.
- CyberArk, with its privileged access management (PAM) platform, dominates approximately 38% of the PAM market and stands to benefit from its predicted expansion at a CAGR of 21.4% from 2024 to 2033. Even though CyberArk is not yet profitable on a GAAP basis, analysts foresee its growth continuing at a CAGR of 26% from 2024 to 2026.
- Tenable, known for its proactive approach to cybersecurity through platforms like Nessus, is forecasted to realize profits by the fourth quarter of 2024 and expects continued profitability in 2025, with EPS anticipated to surge approximately 29 times by 2027. Despite slower growth compared to other companies, Tenable is priced more affordably at four times next year's sales, signaling potential for future growth.
- As cybersecurity threats persist, the market is expected to expand significantly over the next decade due to digital transformation, widespread AI and cloud computing adoption. Thus, it would be prudent to seek wise counsel from a financial advisor before deciding on investments in cybersecurity companies like CrowdStrike, CyberArk, and Tenable. (Disclaimer: Always conduct thorough research before making investment decisions.)
